In 1886, the Michigan Central Railroad, Grand Rapids and Indiana Railroad, and Detroit and Cleveland Steamship Navigation Company formed the Mackinac Island Hotel Company. The group purchased the land on which the hotel was built and construction began, based upon the design by Detroit architects Mason and Rice. When it opened the following year, the hotel was advertised to Chicago, Erie, Montreal and Detroit residents as a summer retreat for vacationers who arrived by lake steamer and by rail from across the continent. The hotel opened on July 10, 1887 and took a mere 93 days to complete. At its opening, nightly rates at the hotel ranged from $3 to $5 a night (equivalent to $81.71–136.19 in 2017).
Carleton Varney, a protégé of Dorothy Draper, designed the Grand Hotel in its late 19th-century decor, including Pelargonium geraniums. Varney purposely designed the hotel so that all the rooms are different from each other in at least one aspect. There are four types of rooms: Category I, Category II, Category III, and Named Rooms. There are six two-bedroom suites consisting of two bedrooms connected by a parlor, of which two, the Grand Suite and the Carleton Varney Suite, overlook the Mackinac Bridge and the Straits of Mackinac. The presidential suite is located in the center of the hotel with a balcony over the porch. A detached structure added in early 2000 was named the Masco Cottage.
Additionally, seven suites are named for and designed by seven former First Ladies of the United States. These are the Jacqueline Kennedy Suite (with carpet that includes the gold presidential eagle on a navy blue background and walls painted gold), Lady Bird Johnson Suite (yellow damask-covered walls with blue and gold wildflowers), Betty Ford Suite (green with cream and a dash of red), Rosalynn Carter Suite (with a sample of china designed for the Carter White House and wall coverings in Georgia peach), Nancy Reagan Suite (with signature red walls and Mrs. Reagan’s personal touches), Barbara Bush Suite (designed with pale blue and pearl and with both Maine and Texas influences), and the Laura Bush Suite (decorated with bright cream and floral patterns inspired by the Texas prairie).
Grand Hotel’s front porch is the longest in the world at some 660 feet (200 m) in length, overlooking a vast Tea Garden and the resort-scale Esther Williams swimming pool. These areas are often used by guests on a casual family vacation, for large conventions, or concerts during the hotel’s annual Labor Day Jazz Festival. The hotel has drawn some criticism for its policy of charging a $10 fee for non-guests to enter the building and enjoy the view from the famous porch.
Before 2007, air conditioning was only available in public rooms, such as the lobby, parlor and Salle a Manger (main dining room). Due to the building’s design it was difficult to add air conditioning to the guest rooms. Air conditioning was installed in 170 guest rooms after water heat exchangers in the bathrooms were added. The exchangers cool the air through contact with the cold water system.
Mackinac Island does not permit motor vehicles (except for emergency vehicles and, in winter, snowmobiles), and transport to and from the dock to the hotel is via horse-drawn carriage. The only other motor vehicles allowed in recent history were cars brought over for the filming of Somewhere in Time. During the winter months, when ice prevents ferry transport from the mainland, the hotel is closed. The island also has a small airport (no fuel or services) for private aircraft. The horse-drawn taxis will take guests from the airport to the hotel or any other destination.